The Strategy and Tactics of Negotiation Process

Attributes of a good negotiator:

1) He must be a clear, rapid thinker
2) He must express himself well and easily
3) He must possess the ability to analyze
4) He must be impersonal
5) He must be patient
6) He must be able to consider the other person’s ideas objectively.
7) He must be tactful, have poise and self restraint
8) He must possess a sense of humor.

The negotiation involves the communication between the buyer an seller either in short lived or extended sessions. The parties to the negotiation must define the objectives of negotiation. In the line of the objectives, they should spell out the issues to be considered and the degree of importance to be given to each issue. Negotiation is a game between two parties. The weakness of one is the strength of the other. Pre-negotiation preparation and good home work in increasing the bargaining position of the party.

Seller’s strength:

1) Absence of competition in terms of number of sellers or superiority of technical competence of seller’s product.
2) The seller’s certainty of getting the contract
3) The intensity of the need of the buyer e.g. short lead time, the need to balance the capacity etc
4) The scarcity of the products in relations to its growing demand.

Seller’s weaknesses:

1) The intensity of the need to have the contact.
2) The existence of keen competition in the market.
3) Dealing with the buyer who provides assured market for the products of the seller.
4) The general economic conditions and industry trends adversely affecting the business of the seller6.

Buyer’s strength:

1) The extent of competition in the market.
2) Ability to analyze the cost data effectively with special reference to seller’s constraint e.g. to hire supplier’s idle capacity.
3) Large size of the order utilizing the substantial part of seller’s production.
4) Economic conditions and its adverse and its adverse effect on the industry of which seller is a member.

Buyer’s weaknesses:

1) Dealings with the seller employing the monopoly in the market.
2) Compelling forces on the buyer to turn to the specific seller only.
3) The intensity of the need of the buyer to get the materials as quick as possible, e.g. emergency buying.
4) The scarcity of the products in relation to its demands.

The complete knowledge about the issues covered under the negotiation helps the party in developing the strategies and the tactics during the negotiation. Strategies and tactics are the integral parts of the negotiation. The strategy deals with the planning for the negotiation and directing the negotiations so as to reach a defined goal, while tactics deal with moves and maneuvers which are employed in implementing the strategy. The strategy and tactics can be employed successfully only the dealing parties become aware about the strengths and weaknesses of each other.

The strategy and tactics should be developed on the basis of the knowledge about the strength and weaknesses of the dealing parties. The information highlighting the strength and weaknesses of the parties can be had from the published data about general economic conditions as well as data about specific conditions of the industry and the company, pre-negotiation talks and behavior of the parties, strength disclosed or errors committed during the negotiation sessions. During the negotiation session one should try to recognize the strength of the other party but at the same time should not succumb to it. Conversely, the party with the bargaining strength should be graceful to the other and should not hit hard on its weaknesses.

Legal Environment and negotiations: The business house is required to honor the laws and regulations enacted by the government. Some legal enactments encourage the negotiations while some provisions restrict the area of negotiation. In India, the Monopolies and Restrictive Trade Practices Act (MRTP Act) discourages the further growth of large houses or forms controlling the production of certain items. Such facilities encourage the competition in the market and thus the bargaining position of the buyer is strengthened .The MRTP Act also discourages certain restrictive and unfair trade practices. Such environment puts the negotiation on a sound footing. On the other hand, the Patent, Trade Mark and Copyright Acts ensure the monopoly to certain firms and the thus strengthens their bargaining power. The price control measures of the Government imposed on certain essential commodities, restrict the area of negotiation on the price variable. However, there are certain tricks which open the avenues of negotiations even on fixed price items e.g. concealed discount offer, as referred in the above paragraphs.